Diskussionsbeiträge: Serie II, Sonderforschungsbereich 178 "Internationalisierung der Wirtschaft", Universität Konstanz 301
This paper considers the players' behaviour in an asymmetric two-player contest. When do they decide to "struggle" and when to "subjugate"? Analysing contest-success functions it is found that two crucial prerequisites for "struggle" or "war" have to be met. Thus, such an equilibrium is possible but restrictive. If a self-interested rule-setter chooses the contest-success function endogenously we show that one player will always subjugate. Applications to rent-seeking and environmental regulation are discussed.